Do attorney's fees agreed to be paid later, or paid by a third party, count as litigation costs? Decision 2019Ma6990 on fees the party 'paid or is to pay'

Question

Article 109(1) of the Civil Procedure Act provides that fees the party paid or is to pay to the lawyer who represented the litigation are recognised as litigation costs within the amount set by Supreme Court Rules, and Article 3(1) of the Rule on Inclusion of Attorney's Fees in Litigation Costs computes those fees per instance, by the value of the subject matter and under the table, within the amount the party paid or is to pay under the fee agreement. The question is how far that recognition reaches: does it include a fee the party only agreed to pay after the fact, and can a fee paid by someone other than the party be recognised at all?

Decision 2019Ma6990 raises the question in a dispute over the amount of litigation costs. After a trust settlor engaged a law firm to defend the trustee in litigation over the trust property, agreeing that its payment would be substituted by the attorney's fees to be recovered later from the opponent through an application for determination of litigation costs, the judgment holding the opponent liable for the costs became final, and the trustee applied for determination of the amount. The court below fixed the amount at 0 won on the ground that the party itself had paid, or was to pay, no attorney's fees.

Material to check

The statutes are Article 109 of the Civil Procedure Act and Article 3 of the Rule on Inclusion of Attorney's Fees in Litigation Costs. Article 109(1) reads: 'Fees the party paid or is to pay to the lawyer who represented the litigation are recognised as litigation costs within the amount set by Supreme Court Rules', and Article 109(2) provides that, when those costs are calculated, several lawyers are treated as one. Article 3(1) of the Rule provides that the attorney's fees included in litigation costs are computed per instance, by the value of the subject matter and under the table, within the amount of fees the party paid or is to pay under the fee agreement; Article 3(2) sets those fees for applications for attachment and injunction orders and for objections to or cancellations of such orders at one half of the amount computed, within the same limit, per instance by the value of the right preserved and under the table, adding that for applications for attachment and injunction orders this applies only where oral argument or a hearing was held. Only paragraph 1 of each is at issue in the decision.

The decision is Decision 2019Ma6990 (24 April 2020), an order of the Supreme Court which set aside the decision of the Seoul Northern District Court of 28 November 2019 (2018Ra1132) and remanded the case. The decision cites Decision 2004Ma1055 in support of its reading; the text of that precedent could not be opened, so nothing further is said here about it.

Possible readings

Read with the words of Article 109(1) and Article 3(1), the fees recognised as litigation costs are not limited to money the party has actually handed over. The decision states that the fees include not only what the party actually paid under the fee agreement but also what the party agreed to pay after the fact, citing Decision 2004Ma1055. The words 'paid or is to pay' in both provisions support that reading, and Article 3(1) places the agreed amount at the ceiling of the calculation rather than outside it.

A second reading concerns payment by a third party. The decision holds that where a third party pays, the fee may still be recognised as a litigation cost included under Article 109(1) if circumstances make the payment the same as payment by the party. The decision does not state a general test for that comparison; in this case it found the sameness from the trust contract, under which the settlor and the party to the litigation had agreed internally on who would conduct trust-property litigation and bear its costs.

A third reading follows from the two. Once the fee is recognised, the amount determined in the cost-determination procedure under the Rule is the fee payable to the law firm under the fee agreement, and it is included in the litigation costs the losing party must reimburse to the party. The Rule's table therefore fixes the recoverable amount within the agreed fee, while the fee agreement supplies the outer limit under Article 3(1).

What the decisions held

Decision 2019Ma6990 held that fees recognised as litigation costs include those the party agreed to pay after the fact, and that a fee paid by a third party can be recognised where circumstances show the payment is the same as payment by the party. On that basis it found that the fee the settlor Happy Sonic Global Inc. agreed to pay the law firm J&C had to be treated as paid by the applicant, KB Real Estate Trust Inc., the party to the litigation.

The facts found were these. Under the trust contract between Happy Sonic Global Inc. and KB Real Estate Trust Inc., the trustee bore no duty to litigate over the trust property except where it accepted a beneficiary's request (Article 10, main sentence), and responsibility for all litigation and complaints arising from the business lay in principle with the settlor and the contractor (Special Terms Article 20(1)). When the respondent sued the trustee over the trust property, the settlor engaged J&C under that contract and agreed that its payment would be substituted by the attorney's fees to be recovered later from the opponent through an application for determination of litigation costs. The trustee appointed J&C as its representative and conducted the action, and once the judgment holding the respondent liable for the costs became final, it applied for determination of the amount of costs.

The court below had fixed the amount the respondent must reimburse at 0 won, because the applicant had paid or was to pay no attorney's fees. The Supreme Court held that the fee agreed under the fee agreement was to be treated as the fee payable to J&C and included in the costs the respondent must reimburse, and that the court below's approach would mean that neither the settlor Happy Sonic Global Inc. nor the party to the litigation, KB Real Estate Trust Inc., could recover the attorney's fees, while the respondent would be released from the duty to reimburse. It set aside the decision of the Seoul Northern District Court of 28 November 2019 (2018Ra1132) and remanded, holding that the court below had misunderstood the law on attorney's fees included in litigation costs and had failed to conduct the necessary examination of the trust contract's content, the circumstances in which J&C came to represent the action and the concrete terms of the fee agreement.

Points left open

The decision does not fix the point at which third-party payment becomes the same as payment by the party. It found sameness here because the settlor's undertaking followed a trust contract that allocated responsibility for trust-property litigation and its costs internally between settlor and trustee. Whether a payment by a stranger to the party, or by a party with no such internal arrangement, would qualify is not answered.

The decision also leaves the amount undecided. It directs that the fee determined under the Rule is included as the amount payable to the firm under the fee agreement, within the cap the agreement sets, but it does not say how the court on remand should determine the concrete terms of that agreement or what the reimbursable figure will be. Those points are left to that court along with the examination it ordered.

When to reconsider

We revisit this brief if the decision on remand fixes the reimbursable amount or the terms of the fee agreement, if a later Supreme Court decision sets a general test for third-party payment of attorney's fees, or if Article 109 of the Civil Procedure Act or Article 3 of the Rule on Inclusion of Attorney's Fees in Litigation Costs is amended.

Statutes referred to

• 민사소송법 제109조
• 변호사보수의 소송비용 산입에 관한 규칙 제3조

Decisions referred to

• 대법원 2020. 4. 24. 자 2019마6990 결정 · Decision ledger

Verification status

All the texts read for this brief were read at the National Law Information Center on 24 October 2026: the articles in their current text, and the decision in its published holdings, summary and reasons. The decision quotes Article 109(1) in the same words as the current text of the cited article as published, while the text of the cited precedent could not be opened.